SEA urges UPA Government not to increase VAT floor rate

Published: Monday, February 4, 2008, 19:08 [IST]

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Vijayawada, Feb 4 (UNI) The Solvent Extractors' Association of India (SEA) today appealed to the United Progressive Alliance(UPA) Government not to increase the floor rate of VAT from four per cent to five per cent on oilseeds, edibile oil, oilcake and rice bran.

Talking to newspersons here, SEA President Ashok Sethia and Executive Director B V Mehta said the Centre should not take hasty steps to increase the Value Added Tax(VAT) to offset any revenue loss that it may incur due to reduction in Central Sales Tax (CST) from three per cent to two per cent.

Mr Sethia also urged the Centre to exempt VAT or reduce VAT to one per cent on the oil seeds and edible oil and others, as they were the essential commodities and were consumed by masses.

He said after referring to recent media reports, SEA had sent a letter to Union Finance Minister P Chidambaram three days ago, stating the prevailing VAT rate of four per cent on oilseeds, oils and oilcakes has a cascading effect and made it difficult for indigenous oilseeds sector to face the challenges of globalisation.

Under the uniform floor rates of sales tax, the State Governments had imposed four per cent sales tax on oilseeds and on all its derivatives, which was just one per cent to two per cent in most of the States prior to April one, 1999, he added.

The high rate of VAT would be a burden to the consumers and lesser realisation to the farmers and also lead to tax evasion by unscrupulous elements and make it difficult for honest traders and Industry to carry on the business, Mr Sethia opined.

Pointing out that oilseeds and edible oils were essential commodities like grain and sugar and required to be treated on par, Mr Mehta said these commodities should be exempted from VAT or may be placed in the category of one per cent VAT.

He said SEA also brought to the notice of Mr Chidambaram that the prices of oilseeds and edible oils have doubled in the last 18 months globally, which has had a huge impact on domestic prices of the commodities.

In order to provide relief to the consumers, it would be appropriate to reduce VAT to nil or one per cent, he added.